Cost-Effectiveness of Reducing Sulfur Emissions from Ships

Abstract

We model cost-effectiveness of control strategies for reducing SO2 emissions from U.S. foreign commerce ships traveling in existing European or hypothetical U.S. West Coast SOx Emission Control Areas (SECAs) under international maritime regulations. Variation among marginal costs of control for individual ships choosing between fuel-switching and aftertreatment reveals cost-saving potential of economic incentive instruments. Compared to regulations prescribing low sulfur fuels, a performance-based policy can save up to $260 million for these ships with 80$480 million over performance-based policy. A market-based policy could save the fleet ∼$63 million annually under our best-estimate scenario. Spatial evaluation of ship emissions reductions shows that market-based instruments can reduce more SO2 closer to land while being more cost-effective for the fleet. Results suggest that combining performance requirements with market-based instruments can most effectively control SO2 emissions from ships